Should You Invest in the iShares U.S. Energy ETF (IYE)?

Designed to provide broad exposure to the Energy - Broad segment of the equity market, the iShares U.S. Energy ETF (IYE) is a passively managed exchange traded fund launched on June 12, 2000.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $1.86 billion, making it one of the larger ETFs attempting to match the performance of the Energy - Broad segment of the equity market. IYE seeks to match the performance of the Dow Jones U.S. Oil & Gas Index before fees and expenses.

The Russell 1000 Energy RIC 22.5/45 Capped Gross Index measures the performance of the energy sector of the U.S. equity market.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.38%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.98%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Energy sector -- about 98.3% of the portfolio.

The top 10 holdings account for about 70.62% of total assets under management.

Performance and Risk

The ETF has added roughly 43.5% and is up about 43.51% so far this year and in the past one year (as of 09/01/2026), respectively. IYE has traded between $45.39 and $67.59 during this last 52-week period.

The ETF has a beta of 0.44 and standard deviation of 21.16% for the trailing three-year period, making it a high risk choice in the space. With about 44 holdings, it has more concentrated exposure than peers.

Alternatives

iShares U.S. Energy ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IYE is a sufficient option for those seeking exposure to the Energy ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Vanguard Energy Index Fund ETF Shares (VDE) tracks MSCI US Investable Market Energy 25/50 Index and the State Street Energy Select Sector SPDR ETF (XLE) tracks Energy Select Sector Index. Vanguard Energy Index Fund ETF Shares has $10.90 billion in assets, State Street Energy Select Sector SPDR ETF has $41.57 billion. VDE has an expense ratio of 0.09%, and XLE charges 0.08%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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This article originally published on Zacks Investment Research (zacks.com).

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